In a very strict sense, the product is a set of physical and tangible attributes gathered in an identifiable form. Each product has a descriptive or generic name that everyone understands: apples, baseballs, etc.
Product attributes that elicit consumer motivation or trigger purchasing patterns are not included in this narrow definition. For example, a volswagen and a datsun are the same product: a car.
A broader interpretation of the term recognizes that each brand is an individual product. In this sense, a Giorgio Armani suit and a Gucci suit are different products.
the-product-2But the brand name indicates a difference in the product to the consumer, and this introduces into the definition the concept of satisfaction of the consumer's needs or desires.
Any change of a physical characteristic (design, color, size, etc.) no matter how small, creates another product. Each change gives the producer the opportunity to use a new set of messages to reach what is essentially a new market.
We can expand this interpretation even further. An RCA television purchased at a discount store and paid for in cash is a different product than the identical model that you buy at a department store. In it the customer pays a higher price for the television. But buying on credit, it is delivered at no additional cost and you receive other services from the store.
The product concept now includes the services that accompany the sale, and thus we have come close to a definition that is useful to marketing personnel.
2.- THE PRODUCT
It is a set of tangible and intangible attributions that includes the packaging, color, price, prestige of the manufacturer, prestige of the retailer and services provided by the retailer and the manufacturer.
The basic idea in this definition is that consumers are buying more than just a set of physical attributes. Basically they are buying the satisfaction of their needs or wants. Thus an intelligent firm sells the BENEFITS OF A PRODUCT more than the mere product.
3.- THE PRODUCT MAY NOT BE A PRODUCT
In reality, the product that a company sells to provide benefits and the satisfaction of consumer wants may not be a physical, tangible item at all. According to our general definition, the product can be a service, place or idea.
The Holiday Inn product is a service that offers the benefit of a comfortable night's rest at a reasonable price.
4.- WHAT IS A NEW PRODUCT
In this case we don't need to look for a very limited definition. On the contrary, we can recognize several possible categories of new products. But the important thing is that each one may require a special marking program to ensure a reasonable probability of success.
5.- CATEGORIES OF NEW PRODUCTS
- Products that are truly innovative or truly novel. An example of these could be a hair restorer or cancer treatment, products for which there is a real need but which still have no substitutes that are considered satisfactory. In this category could be included, products that are very different from those that exist today but that satisfy the same needs.
- Substitutes for current products that are markedly different from those that exist today. For many people, instant coffee replaced ground coffee and coffee beans: later, dehydrated and cold coffee came to replace instant coffee.
- Imitation products that are new to a particular company but not to the market.
Perhaps the fundamental criterion to determine if a certain product is new is the way in which the target market perceives it. If consumers think that the item in question is notably different (from the competitive goods it replaces) in some characteristic (appearance, performance), then we can say that it is a new product.
II.- Classification of products
In the same way that it is necessary to segment markets to improve marketing programs in many firms, it is also useful to divide products in homogeneous classification.
Looking for marketing strategies for certain products in particular, marketers have developed various product classification systems, usually one or two times based on their characteristics.
Products can be classified into three groups according to their durability or tangibility.
- Nondurable goods are tangible goods that are generally consumed in one or more times of use. Examples of this are beer, soap, and salt. Durable goods are tangible goods that usually survive use. The examples include refrigerators, machines, tools and clothes. Services are activities, benefits or satisfactions that are offered for sale; for example, haircuts and repairs. Consumer goods. Consumer goods are those that final consumers buy for their own consumption. Generally, marketers classify these goods based on the consumer's buying habits.
3.1- Common use goods are consumer goods that the customer usually buys frequently, immediately and with minimal effort in comparison and purchase. Examples include tobacco, soap, and newspapers. Common use goods can be subdivided into basic, impulse and emergency goods.
3.2.- Basic goods are those that consumers buy on a regular basis, such as ketchup, Heinz, or Ritz cookies. Impulse acquisition goods are bought without planning or searching; they are usually within reach in many places, because customers rarely look for them. Thus, the chocolates and magazines are close to the boxes, otherwise customers will not think of buying them.
3.3.- Emergency goods are bought when the need is urgent: umbrellas during a downpour, or boots and shovels during a snow storm. The manufacturers of emergency goods place them in many points of sale, to avoid losing this example: the moment when the customer needs them.
3.4.- Comparison goods are consumer goods that usually go through a selection process during which the customer compares them in terms of their suitability, quality, price and style. Examples are furniture, clothing, second-hand cars, and most household appliances. Comparison goods can be divided into uniform and non-uniform.
3.5.- Uniform comparison goods are similar in quality, but different enough in price. But when looking for clothing, furniture, or other non-uniform goods, the characteristics of the product are often more important than the price. If what the customer wants to buy is a new suit, the cut, quality and appearance will be more important than a small difference in price. The one who sells non-uniform comparison goods has to offer a large assortment to suit the tastes of each individual and also have well-trained salespeople capable of providing information and advice to the customer.
3.6.- Specialty goods are consumer goods with some very special characteristic, or of a specific brand, for which an important group of buyers is willing to make a purchase effort. Examples include certain brands and certain specific types of cars, stereo components, photographic equipment, and men's clothing. Shoppers don't often shop for specialty goods - they don't spend more than enough time to get to the store and take the product away. Although these types of stores do not need to be in particularly comfortable places, they do have to inform their customers about their location.
3.7.- Consumer goods that the client does not know. The new ones that although he knows about them, he does not buy them, such as smoke detectors or compact disc devices, are products, until the consumer finds out about them through the media.
3.8.- Industrial goods. Industrial goods are those purchased by individuals or organizations to process or use them in running a business. Thus, the difference between consumer goods and industrial goods is based on the purpose for which they are purchased. If a consumer buys a lawn mower to use at home, it is a consumer good. But if that same buyer purchases the mower to use in a landscape design business, it becomes an industrial asset.
Industrial goods are classified according to the way they participate in the production process and according to their cost. There are three groups:
3.8.1.- Materials and parts.They are industrial goods that enter fully into the product, either through processing or as components. They are of two classes, raw materials and manufactured materials and parts. Raw materials include cultivated products (such as wheat, cotton, livestock, fruit and vegetables) and natural products (such as fish, wood, crude oil, and iron ore). The products grown come from many small producers who deliver them to intermediaries in the market, who in turn process and sell them. Natural products are generally handled in large volumes, have a very low unit value, and require a lot of transportation to get them from producer to user. There are more or less large producers who usually send these products directly to industrial users.
Materials and Manufactured Parts include material components (iron, wire, cement or wire). These are often processed right here: for example, pig iron is turned into steel and the wire is woven into cloth. The parts go fully into the finished product, without changing shape, as when small motors are put into vacuums and tires sold to cars. Most of the manufactured materials and parts are sold directly to industrial users. Price and service are the main marketing factors, while brand choice and advertising tend to be less important.
3.8.2.- Capital goods are industrial goods that partially enter the finished product. They include two groups: facilities and accessory equipment:
- The facilities are the buildings (factories or offices). As facilities are major purchases, they are usually purchased directly from the producer after a long period of decision-making. Accessory equipment includes portable production equipment and tools (handheld or heck), as well as office equipment (typewriters and desks, for example). These products do not become part of the finished product. They have a shorter life than the facilities and are simple auxiliaries in the production process. Most accessory equipment sellers use intermediaries, because the market is geographically widely dispersed, buyers are numerous and orders are small.
3.8.3.- Supplies and services they are industrial goods that do not enter the finished product at all. Supplies include supplies for the operation (such as lubricants, charcoal, typewriter paper, or pencils), as well as maintenance and repair supplies (paint, nails, or brooms). Supplies are the goods of common use in the industrial field, since they are generally bought without much effort or comparison. Services to the industry include repair and maintenance services (window cleaning, typewriter repair) and advisory services (legal, administrative or advertising). These services are usually provided under contract. Maintenance services are often carried out by small producers, and repair services can often be obtained from the original equipment vendors themselves.
III.- International Classification of Products and Services
| Class | List of products |
| 01 | Chemical products intended for industry, science, photography, horticulture and forestry; raw artificial resins, raw plastics; compost for the lands; extinguishing compositions; preparations for tempering and welding of metals; Chemicals intended to preserve food; tanning materials; adhesives (glues) intended for industry. |
| 02 | Colors, varnishes, lacquers; preservatives against rust and wood deterioration; dyeing materials; mordants; natural resins in the raw state; Sheet and powder metals for painters, decorators, printers and artists. |
| 03 | Bleaching preparations and other substances for laundry use; cleaning, polishing, degreasing and scraping preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; toothpastes. |
| 04 | Industrial oils and greases; lubricants; products to absorb, water and concentrate dust; fuels (including motor gasoline) and lighting materials; spark plugs, wicks. |
| 05 | Pharmaceutical, veterinary and hygienic products; dietetic substances adapted for medical use, baby food; plasters, material for dressings; material for filling teeth and for dental molds; disinfectants; products for the destruction of harmful animals; fungicides, herbicides |
| 06 | Common metals and their alloys; metal building materials; transportable buildings of metal; Metallic materials for railways; non-electric cables and wires of metal; locksmith and metal hardware; metal pipes; safes; products of metal not included in other classes; minerals. |
| 07 | Machines and machine tools; engines (except engines for land vehicles); couplings and transmission organs (except for land vehicles); agricultural instruments; egg incubators. |
| 08 | Hand-operated hand tools and instruments; cutlery, forks and spoons; knives; razors. |
| 09 | Scientific, nautical, geodetic, electrical, photographic, cinematographic, optical, weighing, measuring, signaling, control (inspection), rescue (rescue) and teaching apparatus and instruments; apparatus for recording, transmission or reproduction of sound or images; magnetic recording media, acoustic discs; automatic vending machines and mechanisms for prepaid apparatus; cash registers, calculating machines, data processing equipment and computers; fire extinguishers. |
| 10 | Surgical, medical, dental and veterinary apparatus and instruments, artificial limbs, eyes and teeth; orthopedic articles; suture material. |
| eleven | Apparatus for lighting, heating, steam production, cooking, refrigeration, drying, ventilation, water distribution and sanitary installations. |
| 12 | Vehicles; apparatus for locomotion by land, air or sea. |
| 13 | Firearms; ammunition and projectiles; explosives; Fireworks. |
| 14 | Precious metals and their alloys and articles made of these materials or clad, not included in other classes; jewelry, costume jewelery, precious stones; horology and chronometric instruments. |
| fifteen | Musical instruments. |
| 16 | Paper, cardboard and articles made from these materials, not included in other classes; printed matter; bookbinding articles; Photographs; Stationery; adhesives (glues) for stationery or for the home; material for artists; Brushes; typewriters and office requisites (except furniture); instructional or teaching material (except apparatus); plastic materials for packaging (not included in other classes); playing cards; printed characters; cliches. |
| 17 | Rubber, gutta-percha, gum, asbestos, mica and products made from these materials, not included in other classes; semi-finished plastic products; materials that serve to clap, close with tow and isolate; non-metallic flexible pipes. |
| 18 | Leather and imitations of leather, goods made from these materials, not included in other classes; animal skins, trunks and suitcases; umbrellas, umbrellas and walking sticks; whips and saddlery. |
| 19 | Non-metallic building materials; non-metallic rigid pipes for construction; asphalt, fish and bitumen; non-metallic transportable buildings; non-metallic monuments. |
| twenty | Furniture, mirrors, frames; products, not included in other classes, of wood, cork, cane, reed, wicker, horn, bone, ivory, whale, shell, amber, mother-of-pearl, meerschaum, substitutes for all these materials or plastic materials. |
| twenty-one | Utensils and containers for the kitchen or kitchen (not of precious metal or plated); combs and sponges; brushes (except brushes); materials for the manufacture of brushes; cleaning material; iron shavings; unworked or semi-worked glass (except building glass); glassware, porcelain and earthenware, not included in other classes |
| 22 | Rope, twine, nets, tents, awnings, sails, sacks (not included in other classes); fillers (with the exception of rubber or plastics); fibrous textiles, raw. |
| 2. 3 | Threads for textile use. |
| 24 | Textiles and textile products, not included in other classes; bed and table linen. |
| 25 | Dresses, footwear, headgear. |
| 26 | Lace and embroidery, ribbons and bows; buttons, clasps and eyelets, pins and needles; artificial flowers. |
| 27 | Carpets, rugs, mats, linoleum and other floor coverings; wall hangings other than of textile materials. |
| 28 | Games, toys; gymnastic and sporting articles not included in other classes; Christmas tree decorations. |
| 29 | Meat, fish, poultry and game; meat extracts; preserved, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and dairy products; edible oils and fats. |
| 30 | Coffee, tea, cocoa, sugar, rice, tapioca, sago, coffee substitutes; flours and preparations made from cereals, bread, pastry and confectionery, edible ice cream; honey, molasses syrup; yeasts, fluffing powders; salt, mustard; vinegar, sauces (condiments); spices, ice. |
| 31 | Agricultural, horticultural and forestry products and grains, not included in other classes; live animals; fresh fruits and vegetables; natural seeds, plants and flowers; animal feed, malt. |
| 32 | Beers; mineral and carbonated waters and other non-alcoholic beverages; fruit drinks and juices; syrups and other preparations for making beverages. |
| 33 | Alcoholic beverages (except beers). |
| 3. 4 | Tobacco; articles for smokers; matches. |
| Class | List of Services |
| 35 | Advertising; business business management; commercial administration; Office work. |
| 36 | Insurance; financial business; monetary business; real estate business. |
| 37 | Building; repair; installation services. |
| 38 | Telecommunications |
| 39 | Transport; packaging and storage of goods; travel organization. |
| 40 | Treatment of materials. |
| 41 | Education; training; entertainment; sports and cultural activities. |
| 42 | Restoration (food); temporary accommodation; medical, hygiene and beauty care; veterinary and agricultural services; juridical services; scientific and industrial research; computer programming; services that cannot be classified in other classes |
IV.- PRODUCT LIFE CYCLE
Similar to human beings, products go through a life cycle: they grow (in sales), then decline (age) and eventually end up being replaced.
From birth to death, the life cycle of a product is generally divided into four fundamental stages: Introduction, Growth, Maturity and Decline.
The commercial mix of the product of a given company must be modified during the four stages because:
- Customer attitudes and needs may vary over the course of the product life cycle Completely different markets can be addressed at different stages of the life cycle The nature of competition shifts towards the pure or oligopoly form.
In addition, the total sales of the product of all the competitors present in the market vary in each of its stages and what is more important they change the table of their profits, which is why it is very important that the management recognize in which part of the life cycle your product is found at a certain time. The competitive environment and the resulting marketing strategies will differ by stage.
1.- PRODUCT INTRODUCTION STAGE
During this stage of the product life cycle, the product is launched on the market with large-scale production and a comprehensive marketing program; is when the product is first distributed and made available to buyers, introduction takes time and sales growth can be slow. Well-known products such as instant coffee, frozen orange juice and others survived for many years before they entered a rapid growth stage.
In this stage, profits are negative or low due to the lack of sales and because distribution and promotion expenses are high. It takes a lot of money to attract distributors. Promotion costs are high to inform consumers about the new product and encourage them to try it.
In many respects the introduction stage is the riskiest and most expensive, yet for truly new products there is little direct competition. The promotional program can be designed to stimulate primary demand rather than secondary demand ie the type of product is highlighted and not the seller's brand.
2.- GROWTH STAGE
At this stage of growth or market acceptance, sales grow rapidly, competitors enter the market in large numbers because the profit prospects are extremely attractive. The increasing number of competitors will lead to an increase in the number of distributors and sales will spike suddenly because the resellers will build their inventories. Prices will remain stable or will decrease slightly. Producers will continue to spend the same or a little more on promotion to stay in the competition and continue to educate the market. Companies opt for a promotional strategy of "Buy my product" rather than "Try my product"
In this stage companies use different strategies to sustain rapid growth; improve product quality and add new features and models; they penetrate new market segments and open new distribution channels; advertising changes.
3.- MATURITY STAGE
This stage is characterized by the accentuation of competition, the decrease in sales and the decrease in profits, normally this stage is the longest than the previous ones, where in the first part of this period sales continue to grow at a lower rate afterwards. They tend to stabilize but the manufacturer's profits decrease, which is why the challenges posed by the marketer are greater because he is dealing with mature products, the decrease in sales means that producers have many items to sell, in turn this excess of capacity implies greater competition. Competitors begin to lower prices, increase their advertising and sales promotions, and raise their research and development budgets to improve the product. These measures imply that profits decline.The weakest will begin to exit the market and in the long run only those who occupy the best positions will remain.
Product managers should not be content to defend it as a good offense is the best defense. So they have to think about modifying the market, the product, and the marketing mix.
3.1.- Modification of the Market
To increase the consumption of the current product, the market can be modified as follows:
- Looking for new users and market segments
- Seeking to increase usage among current users Seeking to reposition the brand to attract a larger or faster growing segment.
3.2.- Modification of the Product.
It is also possible to modify the characteristics of the product with:
- A quality improvement strategy tends to increase product performance-durability, reliability, speed, taste. This strategy is valid when quality is susceptible to improvement when buyers believe that it has improved and when many consumers are looking for better quality.An appearance improvement strategy adds new features that make the product more useful, safe or convenient. product. (Japanese, with artifacts and copies of gadgets) A style improvement strategy tends to increase the appeal of the product to attract buyers who want something new, for example (New colors, designs, flavors, ingredients, or packaging to revitalize the consumption.
3.3.- Modification of the marketing mix
You can also modify product sales by modifying one or more elements of the mix:
- Lower prices can attract new users and competing customers Launch a more effective advertising campaign or use more aggressive sales promotion techniques such as trade or customer discounts, giveaways and contests Change broader distribution channels to through mass merchants, if it is growing Offer new services to buyers, and improve those it offers.
4.- PRODUCT DECLINATION STAGE
In the long run, sales of almost all shapes and brands of products come to an end.
The decline can be slow as in the case of oat cereal; or fast like video games. They can reach zero or reach a low level where they stay for years.
Reasons for the decline:
- Technological advances Changes in consumer tastes Increasing competition
Maintaining a weak product can be very costly and not only in terms of profits, there are many hidden costs: it can take a lot of administrator time, frequent price and inventory adjustments, attention from advertisers and sellers that could be more profitably spent or made healthy other more productive items. Loss of reputation may affect the image of the company and its other products, but the higher cost may be in the future, as keeping weak products delays the search for replacements, leads to an unbalanced mix, negatively influences profits of the moment and weakens the company's position for the future.
At this stage managers have to make very important decisions when identifying product aging:
- Keep the brand unchanged in the hope that competitors will withdraw and on the other hand it may be decided to reposition the brand. Cutting the product, that is, reducing various costs (plant, equipment, maintenance, research and development, advertising, vendors) in the hope that sales will remain at a more or less adequate level for a certain time. Take the product off the line and off the market, in this case you can sell it to another company or simply liquidate it at its scrap value.
V.- THE PRODUCT LINE
A large group of products, which are intended for essentially similar uses and which have very similar physical characteristics, make up a product line. For example Revlon produces several lines of cosmetics and IBM several lines of computers. Each product line requires a marketing strategy and marketers have to make difficult decisions regarding the length of the line and its features.
1.- DECISIONS ON THE SCOPE OF THE PRODUCT LINE
Product line managers must decide on the breadth of the product line. The latter will be too narrow if the manager can increase profits by adding products; On the other hand, it will be too broad if it manages to increase profits by eliminating some products. The breadth of a product line depends on the objectives of the company. Those companies that want to be recognized as full-line organizations, or that seek high market share and market development, will offer broader lines. When some of the products become unprofitable, these companies are less concerned. In contrast, those companies that are interested in high profitability typically run narrower lines of selected products.
Product lines tend to expand over time, so companies must plan this growth carefully. The company can systematically expand its product line in two ways: expanding it and complementing it.
2.- DECISIONS ON THE EXTENSION OF THE PRODUCT LINE
Each product line of a company covers a range of products offered by the general industry. For example, BMW cars are placed in the upper-middle price category within the market, while Toyota focuses on the mid-price category. The expansion of a product line occurs when a company extends its line beyond the category it occupied. The company can extend this line downward, upward, or both.
DOWN EXTENSION: Many companies start at the top of the market and then expand their lines down. You can do this for a number of reasons. You may find that growth is faster at the bottom; or from the beginning it penetrated the upper part to establish a quality image and then descend. The company can also add a product from the lower category to close a gap in the market that could attract a new competitor. Or it feels attacked at the top and responds at the bottom.
UPWARD EXTENSION: Companies that are at the bottom of the market may want to enter the top. They may be attracted to a higher growth rate, or they may simply want to position themselves as a full-line manufacturer.
The decision to expand upward involves certain risks. Competitors in the upper category are not only well entrenched in their position, they may respond by entering the lower end of the market, and potential customers may not believe that the newcomer is capable of producing quality products. Finally, vendors and distributors may lack the talent and training necessary to serve the higher end of the market.
EXTENSION IN BOTH WAYS: Companies that are in the middle category of the market may decide to expand their lines in both directions.
3.- DECISION ON THE PRODUCT LINE
A product line can also be expanded by adding new items within the same category. There are several reasons for filling the product line: seeking additional profit, trying to satisfy distributors, trying to cash in on excess capacity, trying to run a full-line company, and filling in the gaps to keep competitors away.
But if you overdo it, the result is cannibalism among the products and confusion for the customer. The company must be sure that the new products are clearly different from the old ones.
4.- DECISION ON THE PRESENTATION OF THE PRODUCT LINE
The product line manager usually selects one or two items from the line to present. This strategy is the presentation of the product line. On occasion, managers present promotional models from the bottom of the line to serve as "starters of movement." In other cases, managers present the superior model to give "category" to the product line.
VI.- PRODUCT MIXING
An organization with multiple product lines has a product mix (also called a product assortment), which is the set of all the product lines and items that a specific vendor offers. Avon's product mix consists of four main lines: cosmetics, jewelry, clothing, and household items. In turn, each product line has several sub-lines. Cosmetics, for example, are divided into lipstick, blush, powder, etc. Each line and sub-line have many individual products.
A company's product mix can be described by breadth, length, depth, and consistency.
The breadth of the product mix refers to the total number of products handled by the company. We can also calculate the average length of a line, dividing the total length (total marks) by the number of lines.
The depth of the product mix indicates how many versions of each product are offered within the line.
The consistency of the product mixture referred to as the various lines are similar in their end use, production requirements, distribution channels or other factors.
These four dimensions of the product mix are the starting points for defining a company's product strategy. It can increase your business in four ways. You can add new lines, thereby expanding your mix. In this way, the new lines take advantage of the company's reputation in its other lines. Or you can also extend your product lines to become a full-line company. It is also possible to add more versions of each product and thereby deepen your mix. Finally, the company may seek greater - or less - product line consistency, depending on whether it wants to build a solid reputation in a single field or in several.
Making these decisions requires not only a good understanding of the wishes of consumers and the strategies of competitors, but also paying increasing attention to social policies that are increasingly important and affect product decisions.
MIXING COMPONENTS
When designing the product mix, it is important for the company to establish the behavior that some of its components must assume. This behavior corresponds to the leading products, the attraction products, the tactical products. The characteristics of each of these products are:
- LEADING PRODUCT: It is the product that provides the highest profits to the company. ATTRACTION PRODUCT: It is one that is used to attract the customer. For example, in the case of a company that sells televisions, it may have its economic model as its attraction product; This allows TV vendors the opportunity to offer customers the products of the mix. STABILITY PRODUCT: It is that product that allows the company to avoid fluctuations in sales that it could be experiencing. This is the case of a company that produces ice creams, which are most widely accepted in the summer season and whose stability product is chocolates for the winter season. TACTICAL PRODUCT:It is one that is used by the company to strengthen its position against the competition. Leading companies make use of tactical products in order to attack their challengers. This is the case of an evaporated milk manufacturing company that launched a new brand of powdered milk to counter a competing company.
VII.- NEW PRODUCT DEVELOPMENT PROCESS
New products are essential for growth
One recommendation that management should always keep in mind is this: "innovate or die." In truth, an attitude of innovation is a philosophy parallel to that of the concept of marketing. Many companies will derive a significant portion of their sales volume and net profits this year from products that did not exist 5 or 10 years ago. Furthermore, several studies have shown that growing industries are those that are oriented towards new products.
1.- DESIGN OF NEW PRODUCTS
What is a new product? In this work we consider a product new if it is new in any sense for the company in question. A new product can be created or made "new" in many ways. An entirely new concept can be translated into a new article and / or service. Simple minor changes to an existing product can make it "new" or an existing product can be offered to new markets that will consider it "new."
We can only consider a product new for a limited period. According to the Federal Trade Commission, six months is the maximum period during which a product can be considered new. In order to be assigned that status, says the Commission, a product must be entirely new or have changed in a functionally important or substantial sense. "" While six months may seem a very short period in the eyes of business-oriented businessmen. towards production, it may be reasonable given our previous analysis of product life cycle approvals.
Determine what customers and intermediaries want. All the people who treat, sell or use it must be taken into account when developing a new product. Of course, the needs and attitudes of customers in a market segment must determine the product made for that market. Relevant product-oriented dimensions should be helpful in deciding which traits to highlight, and it is clear that the product should contain all the fundamental characteristics that consumers expect to find.
But product designers should not only take into account end consumers but also intermediate customers. There may be special packaging or handling requirements.
Incorporate long-term "goodness" into products when possible. Socially responsible companies are beginning to recognize that they must take the long-term interests of consumers into account when designing their products. And consumer interest groups are helping to impose this awareness on more businesses.
The company's final choice of product design must be consistent with the company's overall goals and provide efficient use of resources. It would be equally desirable to create an offer that meets needs and attracts all stakeholders, not only in the short term but also in the long term.
Types of new product opportunities
2.- NEW PRODUCT DEVELOPMENT STRATEGY
Faced with rapidly changing tastes, technology, and competition, a company cannot rely solely on the products it already has. Customers want and expect new and better articles. The competition goes to great lengths to produce them, and every company needs a new product development program. One expert believes that half of the income of all American companies comes from products that did not even exist ten years ago.
There are two ways for a company to have new products: acquisition, that is, the purchase of a company, a patent or a concession to produce an item owned by a third party, or development of new products in the research and development department of the company. As the costs of developing and introducing major new products have risen, many large companies have chosen to acquire existing brands rather than create them. Others save money by copying the competition or reviving old brands.
2.1.- GENERATION OF IDEAS
The development of new products begins with the generation of ideas, that is, with the systematic search for ideas for new products. It is typical for a company to generate many ideas to find the good one. This search must be systematic, rather than fortuitous, otherwise the company could find many, but not suitable for its business. One company spent more than a million dollars researching and developing a new product that top executives rejected because they didn't want to do that kind of business.
This mistake can be avoided by carefully defining new product development strategies. It is necessary to determine which products and markets to highlight; what the company wants from those products, cash flow, market share, etc; how much effort will be devoted to the development of original products, changes to existing products, and imitations of competing products.
Main stages of new product development
For new ideas to flow, the company must use a variety of sources. The main ones include the following:
- Internal sources - An analysis shows that more than 55 percent of all ideas for new products come from within the company, which finds them through research and development. You can "squeeze" the brains of your researchers, engineers and producers, or tap into the sudden inspiration of your executives. Salespeople are also another important source for their daily contact with customers. Almost 28 percent of new product ideas come from observing and listening to the customer. Consumers' needs and wants are identified through surveys. About 27 percent of new product ideas come from analyzing competing items. The company studies advertising and other communications to get a picture of what its competitors are doing.Distributors and suppliers.- Resellers are very close to the market and can provide information about consumer problems and the possibilities of the new product. Suppliers can speak to the company of new concepts, techniques and materials usable in the development of new products.Other - Trade publications, exhibitions and seminars, advertising agencies, market research companies, university or commercial laboratories and inventors, are other sources of ideas for new products.techniques and materials usable in the development of new products. Others - Publications, trade exhibitions and seminars, advertising agencies, market research companies, university or commercial laboratories, and inventors are other sources of ideas for new products.techniques and materials usable in the development of new products. Others - Publications, trade exhibitions and seminars, advertising agencies, market research companies, university or commercial laboratories, and inventors are other sources of ideas for new products.
2.2.- FILTERING OF IDEAS
The purpose of generating ideas is the formulation of the greatest of these; the objective of the subsequent stages is to reduce this number. The first stage for this is the filtering of ideas, whose goal is to detect the good ones and dry out those that are not, as soon as possible. Product development costs increase greatly in the later stages, so the company is interested in keeping only those that can become income-generating products.
Most companies require their executives to write down new product ideas on a standard form that will be reviewed by the specialized committee. It describes the product, the target market and the competition, and makes a brief estimate of the size of the market, the price of the product, the time and cost of development and the percentage of profits. They answer the following questions: Is the idea good for our particular company? Do we have the staff, capacity, and resources to make it successful? Many companies have well-designed systems in place for evaluating and screening new product ideas.
2.3.- DEVELOPMENT AND VERIFICATION OF CONCEPTS
Subsequently, the ideas that survive are converted into product concepts. It is important to distinguish between a product idea, a product concept, and a product image. A product idea is an idea for a possible product that the company could put up for sale. The concept of a product is a detailed version of that idea expressed in terms that are understandable to the consumer. The image of a product is the way in which the consumer perceives a real or potential product.
2.4.- DEVELOPMENT OF THE MARKETING STRATEGY
The formulation of the marketing strategy consists of three parts.
The first describes the target market, the planned positioning for the product and the sales objectives, market share and profits to be achieved in the first years. So: the target market is households.
The second part of the marketing strategy formulation outlines the likely product price, distribution, and marketing budget for the first year.
The third part describes the planned long-term sales, the target profits and the strategy of the marketing mix.
2.5.- COMMERCIAL ANALYSIS
Once managers have made a decision on their product concept and marketing strategy, they can evaluate the business appeal of the proposal. Business analysis involves reviewing sales, cost, and profit projections to determine whether they meet the company's objectives. If that's the case, you move on to the product development stage.
To estimate sales, the company must examine the sales history of similar products and conduct a market opinion survey. After preparing the sales forecast, managers have to estimate the expected costs and benefits of the product. The research and development, production, accounting, and finance departments estimate costs, which include marketing. The company then uses the sales and cost figures to analyze the financial appeal of the new product.
2.6.- PRODUCT DEVELOPMENT
If the product concept passes the commercial test it advances to the product development stage, during which the research and development or engineering department transforms the concept into a physical product.
Until then, there is only a verbal description, an outline, or perhaps a scale model. However, this step requires a large investment, as it will demonstrate if the idea can be transformed into a workable product.
The research and development department will make one or more physical versions of the product concept, and hopes to find a prototype that meets the following criteria:
- Consumers see key features outlined in product concept formulation Performs well in normal use Production is within budgeted costs.
Developing a successful prototype can take days, weeks, months, and even years; It must meet the required functional characteristics and also present the expected psychological characteristics.
Once ready, the prototypes must be put to the test. Functionality tests are carried out under laboratory and field conditions to ensure that performance is safe and effective.
2.7.- MARKET TESTS
If the product passes functionality and consumer testing, the next step is to market it. Market testing is the stage when the product and marketing program are introduced to a more realistic market environment.
These tests allow the marketer to experiment with merchandising, spot potential problems, and gather more information before going to the big expense of the introduction itself. The basic objective of this stage is to test the product itself in real market situations, but it also allows the company to test its global marketing program, its positioning, advertising, distribution, pricing, branding and packaging strategy, and levels. budget. The company uses these tests to find out the reaction of consumers and distributors to the handling, use and buy-back of the product.
The amount of marketing tests required varies with each new product. Since the costs could be enormous and the trials take a long time that the competition would take advantage of, if the cost of developing and introducing a product is low, managers are already confident in the success of the product.
2.8.- COMMERCIALIZATION
Market testing provides administrators with the information they need to make the final decision about a new product launch. If the company moves towards commercialization - introduction of a new product to the market - it will face high costs. You will have to build or rent production facilities, and if it is a new consumer packaged product, you will have to spend between $ 10 million and $ 100 million in advertising and promotion for the first year alone.
To launch a new product, the company must make 3 decisions:
When?
The first thing is to decide if it is time to introduce it to the market if it can be improved even more it could be launched the following year. If the economy is not having a good time, the company may decide to wait.
Where?
The company must decide whether to launch its new product in one place, in one region or several, in the national or international market. Few companies have the confidence, capital, and capacity to introduce new products across the country.
To who?
Within its market expansion program, the company must direct its distribution and promotion to the best prospects; You already have a top profile, but now you need to fine-tune your market identification and look especially at early adopters, consistent users, and thought leaders.
3.- MANUFACTURER'S CRITERIA FOR NEW PRODUCTS
When should the proposed new product be added to the current assortment of the campaign? Here are some guidelines that some manufacturers apply when answering this question:
- There should be adequate market demand. This is by far the most important criterion to apply to the proposed product. Too often, management begins by asking a question such as the following: "Can we use our current sales force?" or "Will the new item fit into our production system?" The basic question is this: “Are there a sufficient number of people who really want our product?” The product needs to be compatible with the environmental and social standards currently in force. Do manufacturing processes pollute aite or water (as do the steel and paper mills) the manufacturing processes? Will the use of the finished product harm the environment (such as automobiles)? After use,Is the product harmful to the environment (such as DDT and other detergents)? Is it possible to recycle it? The product should fit within the company's current marketing structure. Her general experience in this regard is important. Bill Blass would probably find it easy to add patterned sheets and towels to his clothing line, while manufacturers would have a hard time adding margarine to theirs. More specific questions can be asked when it comes to tailoring new products to marketing: Can the current sales force be utilized? Can the existing distribution channels be used? A new product will be greeted with a more favorable attitude by management, if it fits within the current production facilities,its manpower power and the possibilities of the company. The product must be financially suitable. There are at least three questions to ask: Is there enough funding? Increase the seasonal and cyclical stability of the company for the new product? Are the profit chances worth it? There should be no legal objections. Patent applications must be made, the label and packaging must comply with the standards, etc. Company managers must have the time and ability to deal with the new product The product must match the company's image and In its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.The product must be suitable from a financial point of view. There are at least three questions to ask: Is there enough funding? Increase the seasonal and cyclical stability of the company for the new product? Are the profit chances worth it? There should be no legal objections. Patent applications must be made, the label and packaging must comply with the rules, etc. Company managers must have the time and ability to deal with the new product The product must match the company's image and Its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.The product must be suitable from a financial point of view. There are at least three questions to ask: Is there enough funding? Increase the seasonal and cyclical stability of the company for the new product? Are the profit chances worth it? There should be no legal objections. Patent applications must be made, the label and packaging must comply with the rules, etc. Company managers must have the time and ability to deal with the new product The product must match the company's image and Its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.Is sufficient funding available? Increase the seasonal and cyclical stability of the company for the new product? Are the profit chances worth it? There should be no legal objections. Patent applications must be made, the label and packaging must comply with the standards, etc. Company managers must have the time and ability to deal with the new product The product must match the company's image and In its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.Is sufficient funding available? Increase the seasonal and cyclical stability of the company for the new product? Are the profit chances worth it? There should be no legal objections. Patent applications must be made, the label and packaging must comply with the rules, etc. Company managers must have the time and ability to deal with the new product The product must match the company's image and Its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.Company managers must have the time and ability to deal with the new product. The product must correspond to the image of the company and its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.Company managers must have the time and ability to deal with the new product. The product must correspond to the image of the company and its objectives, a firm that prefers low-priced, high-turnover products should not normally add an item that denotes prestige or status.
4.- CRITERIA OF THE INTERMEDIARIES REGARDING THE NEW PRODUCTS
When retailers or wholesalers are studying the convenience of handling a new product, they will use the above criteria minus those related to production. They should also consider:
- The relationship with the manufacturer: the reputation of the manufacturer, the possibility of obtaining the exclusive rights of sales in a certain geographic territory and the type of promotional and financial support that the manufacturer gives. Practices and policies in the store: what type of effort of sales requires the new product? How does this fit within the store's policies regarding repair service, modifications (in the case of clothing), credit and delivery?
5.- PROCESS OF ADOPTION AND DISSEMINATION OF THE NEW PRODUCT
The opportunity to commercialize a new product successfully increases if the management knows the processes of adoption and diffusion of the same. The adoption process is the decision-making activity of an individual by which the new product (innovation) is accepted. Diffusion is the process by which innovation spreads through a social system over time.
5.1.- Stages of the adoption process
The prospective user goes through the following six stages during the process of deciding whether to adopt something new:
| STAGE ACTIVITY OF STAGE |
| Knowledge. The individual is exposed to innovation; becomes a potential Customer
Interest. The potential customer is keen to search for information. Evaluation. The prospective customer mentally measures the relative merits of the Product Test. The potential customer embraces the innovation in a limited way. Adoption. The prospective customer decides whether or not to use the innovation in a comprehensive way. Post Adoption Confirmation. The innovation is adopted, then the user continues to seek the assurance that they made the right decision. |
CONCLUSIONS
- A company can fulfill its socio-economic responsibility to satisfy its customers by manufacturing and marketing products or services that truly satisfy needs or wants. The dual product classification is a useful framework for strategic planning of marketing operations. Each main class of products ends up belonging to a different type of market and therefore requires different marketing methods. Buying habits related to comparison goods affect the distribution and promotion strategy of manufacturers and intermediaries alike. these times the life cycle of the products are becoming shorter,This means that the modern company must continually create new products and must seek to have a commercial mix (and not just one product) that makes the best use of the early stages of the life cycle when profits are highest. The duration of the cycle influences the planning of the strategy is for this reason that realistic plans must be developed for the last stages. There is no need for a company to get frustrated and wait for its products to go through a complete life cycle. The product line consists of an extensive group of products that are intended for essentially similar uses and that have very similar physical characteristics. The product mix. It consists of the combination of the products that the company presents.Management must have a simple strategy to expand the product mix and increase the number of lines and their productivity. Companies will obtain a considerable part of their sales volume and net profits from their products that did not exist 5 or 10 ago years, that is why it is important to be constantly innovating. The new product development process consists of several stages, but it is important for management to realize in the early stages whether or not to abandon the product for different reasons, as this will avoid doing an unnecessary expense and to be able to channel the efforts in another new product.Companies will obtain a considerable part of their sales volume and net profits from their products that have not existed for 5 or 10 years, so it is important to be constantly innovating. The process of developing new products consists of several stages, but It is important that management realizes in the early stages whether or not it abandons the product for different reasons, as this will avoid unnecessary spending and be able to channel efforts into another new product.Companies will obtain a considerable part of their sales volume and net profits from their products that have not existed for 5 or 10 years, so it is important to be constantly innovating. The process of developing new products consists of several stages, but It is important that management realizes in the early stages whether or not it abandons the product for different reasons, as this will avoid unnecessary spending and be able to channel efforts into another new product.
